Advisory opinion letter

Isl William W. Rogal

Second AtWchment

March 3, 1977 Gentlemen:

This request for a staff advisory letter is submitted on behalf of Glendinning Companies, Inc. and Associated Grocers of Colorado. Glendinning is a marketer of game of chance promotions utilized by food retailers and others in connection with advertising their goods and services. Associated Grocers of Colorado is a cooperative group of independent food retailers operating in Colorado, part of Wyoming and part of New :vexico.

The market area in which Associated Grocers operates is dominated by two large chain retailers, Safeway Stores and King Soopers. Together these two large retailers account for in excess of 80 percent of the food retail market in the relevant area. The combined market shares enjoyed by these two large chains has steadily increased in recent years at the expense of independnet grocers such as Associated Grocers of Colorado.

For approximately the last seven weeks 28 Associated stores have employed a Glendinning game of chance promotion known as "Shoppers Spree Bingo . The game has been successful in the sense that the participating stores have enjoyed increased sales and have regained a small part of the business lost to the larger competitors. Because of this favorable experience most of 28 stores wish to extend or renew the game for an additional 13 weeks. In addition, a substantial number of Associated stores which elected not to participate during the initial run of the game now wish to participate during the 13 week extension. Thus the mix of stores would change during the second run with a few of the original stores dropping out and an undetermined number of new stores entering.

During the extension period the prize structure will remain the same , the odds or chances of winning in each separate prize category will remain the same. Only the market area, the number of participating ADVISORY OPINIONS 667

stores and the number of prizes in each category wil1 increase depending upon the number of stores which elect to participate. It is important to realize that this is a scattered market area and not a homogeneous, easily defined metropolitan market. The stores are scattered in various smal1 towns and cities. Apparently each separate area or store places its own advertising but the consuming public is free to play the game at any outlet. Glendinning provides a!! of the stores with assistance in preparing advertising to make certain that a!! disclosures mandated by the Commission s trade regulation rule are made.

It is not economical1y possible to provide a unique and separate game for individual stores. The gamc materials must bc mass produced and mixing must be done on a market-wide basis. Moreover, separate games with different prizes and different termination dates would hopelessly confuse consumers.

It seems apparent that an extension of this game in the manncr outlined above wou1d not deceive or confuse consumers. It is also apparent that the extension would be in the public interest in that it would enable this group of relatively smal1'food retailers to better compete with their large, chain competitors. And, convers1y, a refusal to permit the Associated storcs to cngage in this method of competition would adversely affect competition in this market area. Thus , Glendinning; and Associated rcqucst a staff opinion advising them that an extension of the game in the manner outlined in this letter would not be considered by the Commission as a violation of its trade regulation rule. Lnfortunately, time is of the essence in this matter. Plans must be made immediately for the printing and distribution of gamc materials. Commitments and orders for materials must bc placed within two weeks from today in order to permit the extension to commence when the original game terminates. Sincerely,